The officer was wounded shortly after 9:30 p.m. Tuesday along the 600 block of North Godfrey Street.
Police say the situation turned violent without warning.
"As officers of our emergency response team were approaching the door, they were met by gunfire," said Allentown Police Chief Keith Morris. "One of our officers was struck. That officer is in stable condition."
The officer suffered a gunshot wound to the arm. He was taken to Lehigh Valley Hospital for treatment and later released.
Police returned fire, shooting the suspect at least twice. The suspect was also taken to Lehigh Valley Hospital where he remains in critical condition.
Police have not commented on the extent of the injuries or the suspect's condition.
Some nearby residents were evacuated immediately following the incident, but were allowed back in their homes around 1:30 a.m. Wednesday.
Action News learned overnight that police were at the home to serve a warrant related to a homicide discovered on Sunday.
The body of an unidentified woman was found in a large blue recycling bin. She had been fatally shot.
The discovery was made around 2:45 p.m. Sunday in a parking lot in the 800 block of East Tilghman Street - less than three blocks from the suspect's home.
Authorities are still working to identify the victim. She is described as an Asian woman, between 18-30 years old, about five feet tall, weighing about 119 pounds with short, black hair.
The coroner's report released on Tuesday indicated the woman had a number of distinguishing scars on her arms.
Neighbors say the suspect did have an Asian girlfriend.
Some neighbors also admit to becoming suspicious after hearing about the murder case, and then not seeing the girlfriend over the past several days.
Anyone with information is asked to contact police.